Doctors' strike may have impact on industrial relations system

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A lengthy doctors' strike, which ended in August 2001, has highlighted the problems of employees in the Finnish public sector. The basic services of the country's welfare state have been provided by the public sector, but the doctors' strike is an indication of a possible turning-point which may lead to weakening of public services and more private sector provision. The doctors' wage increase of 10.5% over two years - double that awarded to other employees by the 2001-2 central incomes policy agreement - will possibly also have an effect on the Finnish industrial relations system as a whole. Elokuussa 2001 päättynyt lääkärilakko on nostanut esiin koko julkisen sektorin palkansaajien ongelmat. Suomalaisen hyvinvointivaltion peruspalvelut on tuotettu julkisella sektorilla mutta lääkärilakko on osoituksena mahdollisesta murroksesta, joka johtaa julkisten palveluiden heikkenemiseen ja niiden tuottamiseen enemmän vapailla markkinoilla. Lääkäreiden saamilla 10.5%:n palkankorotuksilla on oletettavasti vaikutusta myös suomalaiseen, solidaariseen työmarkkinajärjestelmään.

A major industrial dispute over pay and working conditions involving the Finnish Medical Association (Suomen Lääkäriliitto, SLL) and the Commission for Local Authority Employers (Kunnallinen Työmarkkinalaitos, KT) ended in August 2001 after 20 weeks of strike action by doctors in public healthcare (FI0108197N). Under the final settlement, the doctors received a wage increase of 10.5% over two years - double that awarded to other employees by the 2001-2 central incomes policy agreement (FI0012170F).

The conflict has highlighted the problems of employees in the public sector. The basic services of the Finnish welfare state have hitherto been provided in the public sector, but the doctors' strike is an indication of a possible turning-point which might lead to weakening of public services and more market sector provision. This can been seen as indicating a decline in the welfare state and a change in the industrial relations system.

Crisis in the public sector?

The budget cuts during and after the recession at the beginning of the 1990s were largely directed at the social and health sector, which has burdened the public budget the most. Even though the economy has grown strongly since, no significant additional allocations to the public sector have taken place. A desire to pay off the considerable state debt while the economic situation is good has been used as justification for this austerity.

As long as there are no new resources, or no desire to allocate them to basic services, the natural consequence is impoverishment of the public sector. Critics contend that the prospects for the future are that education and health services, previously produced of high quality, will weaken compared with what they were earlier. According to Erkki Kangasniemi, the chair of AKAVA-JS, the public sector negotiating commission of the Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA), wages in the municipal sector are not competitive in relation to the training demanded and the requirements of the job tasks. However, the employers' organisation in the municipal sector, KT, bewails its lack of funds for services and staff and places the responsibility on the shoulders of the government.

Trade unions and the welfare state

Strike action taken by key groups in the public sector may also influence the centralised Finnish incomes policy system as a whole. When such groups start to strike, the pressures towards more decentralisation in the public sector will grow. So far, the Finnish industrial relations system has remained quite stable. However, during recent incomes policy bargaining rounds (FI0011167F), it was already possible to see changes in the direction of a decentralised system in the case of a few private sector trade unions. These strong unions tried to extract what benefits they could, at the expense of solidarity (FI0005147F). Now, this phenomenon seems to have spread to become the strategy of some key groups in the public sector. The incomes policy system will face difficult challenges if the nurses, for instance, demand high wage increases in the wake of the doctors' settlement. Other wage earners will hardly be content to watch from the sidelines. Nevertheless, the trade unions movement has hitherto been seen as a staunch backer of the centralised incomes policy system.

At the same time, the trade unions – notably the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK) - have widely promoted the cause of the welfare state and basic services, financed by taxes. In the document Work generates welfare, adopted at the SAK congress in 2001 (FI0106190F), it is stated: "The biggest achievement of the trade union movement and the whole labour movement is the Nordic welfare model. Its core is formed by welfare services of good quality, which are mainly free and financed by common taxes, and which belong to every one. Good public administration, safe living environment and infrastructure that is functioning in all respects, are the basic conditions of welfare. The public services help also toward the implementation of equal opportunities. However, there is a need for improvement in the schools, hospitals, care of the elderly, and cultural services. SAK will make purposeful efforts in order that the financial basis of welfare services which are the responsibility of the government and municipalities will be guaranteed, and that the availability and quality of public services will be improved throughout the whole country."

As key public sector groups take their own strike action, these goals may be reconsidered. If such key groups aim to achieve considerably higher pay increases than others, the question will be raised as to how these increases can be financed. If they are funded through the public budget, this will mean pressure in the direction of tax increases for wage earners, especially if the economy slows and corporation tax revenues drop. Though the government has been asked for extra resources for the public sector, it has been trying to maintain strict budgetary discipline, which has arguably led to a continually worsening level of services and a weakening welfare state. At the same time, the government has tried to ease taxation to bring it closer to the EU average. Given this equation, it seems that Finland is not able to afford the welfare state in its previous form, even if there is more money in the economy than ever.

March of the civic organisations

According to opinion polls, the welfare state has the steady support of the Finnish people. In spite of this, the welfare model is, it appears, in the process of being weakened. The same type of development seems to be going on all over Europe.

Besides the trade unions, the welfare state has been strongly backed by new civic organisations and non-governmental organisations. These have been most visible at meetings of international organisations, such as the G-8 (IT0108196N) or World Trade Organisation (EU9912217N), where the main lines of economic and political policy are decided. Since they believe that decision-makers seem no longer to fulfil their voters' hopes, the civic organisations have taken a more active role in trying to influence decisions. They have tried to do this by means of accurate information and peaceful demonstrations. However, demonstrations at such international meeting have sometimes got out of hand and resulted in violent riots. The peaceful political message that these various civic organisations have attempted to communicate has often been drowned amidst the violence. These movements have frequently been aiming to make visible their resistance to a neo-liberal, market-dominated economic policy which they fear will cause a crumbling of the welfare state and weaken the position of citizens.

Commentary

The doctors form an important public sector group, which has influence and power. Previously, the strike weapon had been used very sparingly by such groups, but in 2001 the SLL doctors' union wanted to make maximum use of its organisational power in order to push its demands through.

The unions are also civic organisations, and they generally use strike action as a last resort in promoting their interests. In this light, the doctors' strike – Finland's longest - can be seen as radical, legal action to defend public welfare services. Doctors' representatives have stated that the public healthcare system has functioned up until now and the profession would like to keep it public, but with the condition that sufficient resources must be guaranteed. In the final analysis, therefore, the strike was concerned with the question of how much the political decision-makers are prepared to pay for basic public services.

The result of the doctors' dispute - a wage increase twice that gained by the other wage earners in the 2001-2 centralised incomes policy agreement - is sure to be brought up in the next bargaining round, causing tensions which could affect the whole system. Prime Minister Paavo Lipponen has already announced his hope that demands of this sort will not be repeated in the future. This is asking a lot. (Juha Hietanen, Ministry of Labour)